Smooth sailing eyed for Crane’s purchase of Astros

As Major League Baseball’s accountants and attorneys sift through Jim Crane’s application to purchase the Astros, consultant Steve Greenberg believes they will find a transaction that represents a refreshing return to business as usual.

Greenberg, the investment banker for the New York firm Allen & Co. who represented Astros owner Drayton McLane in sale negotiations, expects MLB will require four weeks or so to “basically cross the T’s and dot the I’s on a whole bunch of stuff” associated with the $680 million transaction.

“There’s a purchase agreement, which is a lengthy document, and then an application form, which includes a lot of financial information on the structure of the transaction,” Greenberg said. “It’s maybe 100 pages.

“It’s a bit of a bureaucracy. It goes to the general counsel of the commissioner’s office, and he’s busy with a lot of other stuff. There’s a little matter in Los Angeles he’s dealing with. There are labor negotiations — a lot of other things going on at the moment.”

After staff members study the documents, MLB’s ownership committee — minus McLane, who must recuse himself — will make a recommendation to the commissioner and the other owners, who will receive a summary of about 10 pages outlining details of the agreement.

“Think of it as if it were a corporation with a board of directors and someone was asking the board to vote on a significant merger or acquisition,” Greenberg said. “They would prepare a summary so the board members were informed, and if they had questions, they could ask them in an informed manner.”

McLane has predicted his agreement with Crane will “sail through” to approval.

After completing work on the Astros deal, Greenberg is trying to find a buyer for a minority interest in the New York Mets. He was retained after the Wilpon family and the family-controlled Sterling Equities were sued by a trustee representing creditors in the Bernard Madoff case.

Compared to that case, other recent sales and the financial turmoil surrounding the Los Angeles Dodgers that led commissioner Bud Selig to name former Rangers owner Tom Schieffer to oversee the team’s daily operations, Greenberg said the Crane sale is relatively vanilla.

‘Very smooth transaction’

“It’s very, very smooth by baseball standards,” he said. “The Cubs transaction (in 2009) was shrouded in the whole Tribune Co. bankruptcy, and the Rangers transaction (in 2010) was surrounded by the bankruptcy situation there.

“This was a very smooth transaction. I think I predicted it would take six to 12 months to get it done, and it was on the short end of that. There was a robust level of interest in the market. The best buyer ultimately emerged and struck a deal, that being Jim Crane, and he put together a terrific group of local businessmen (as investors).”

A recent case of MLB’s rejecting a prospective owner came in 2000, when owners turned down a higher bid by New York attorney Miles Prentice to approve the sale of the Kansas City Royals to Wal-Mart executive David Glass.

The sale announcement Monday identified nine individuals or groups associated with Crane’s deal, which one person with knowledge of the agreement said involved more than 36 individuals. Greenberg believes all have undergone MLB background checks.

Divvying up $680 million

No financing details have been released regarding the agreement, which includes McLane’s 60 percent share of Houston Regional Sports Network, which was created by the Astros and Rockets in 2002 to control broadcast rights. The teams last year signed with Comcast to launch a new regional sports network in 2012.

Forbes.com has estimated the Astros’ value at $474 million with $14.4 million in operating income last year. The Astros’ share of their broadcasting venture was valued in 2002 at $213 million. The teams are believed to own 77.5 percent of their joint venture with Comcast, which is said to be valued at $750 million.

It remains unclear how the $680 million price is divided between the ballclub and the RSN and how much debt is assigned to each entity.

“I’m highly confident that the capital structure is well within the limits that will be permissible by Major League Baseball,” Greenberg said.